Publications / McDermott Newsletters / Brussels Brief - October 26, 2007

Brussels Brief - October 26, 2007

October 26, 2007

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KEY DEVELOPMENTS

Taxation:  Commission Challenges German Rules on Cross-Border Loss Set-off

Elena Kostadinova

The European Commission has sent Germany a reasoned opinion, the first stage of an infringement procedure, concerning the country’s legislation in relation to the set-off of losses incurred outside the home Member State.  Under German law, a natural or legal person can set-off losses from the rental of property situated in another Member State only against income from rental of property situated in that Member State, but not in their home Member State.  According to the Commission, this limitation is an obstacle to establishment in another Member State and to the free movement of capital.  If Germany fails to amend its legislation within the time limits determined by the Commission, the Commission can bring Germany before the European Court of Justice.

 

Competition:  Consultation on Sky Team Commitments to Enhance Competition

Philip Torbøl

In the context of the ongoing European Commission investigation into the anti-competitive effects of the Sky Team Airline Alliance, members of the Alliance have agreed to abide by a set of commitments proposed by the Commission.  These are designed to remedy the Commission's concerns with respect to certain transatlantic routes and routes between Prague and the EU hubs Amsterdam, Milan, Paris and Rome.  The proposed commitments include making slots available at the appropriate EU airports to allow competitors to operate more services on the routes in question.  In addition, the Sky Team frequent flyer programme would be made available to other airlines.  The Commission invites interested parties to submit their comments on the proposed commitments by 19 November 2007.

 

Internal Market:  Volkswagen Law Restricts Free Movement of Capital

Bróna Heenan

The European Court of Justice has ruled that a German law from 1960 aiming to protect car manufacturer Volkswagen (VW) from hostile takeovers restricts the free movement of capital in the European Union.  The "Volkswagen law" provides that: (i) no single shareholder can have more than 20 per cent of the voting rights in VW regardless of the actual level of their shareholding; and (ii) the Federal State and the region of Lower Saxony are each entitled to appoint two members to the firm's supervisory board.  The law also allows the State or regional shareholder a blocking minority for certain important general assembly resolutions through an 80 per cent majority rule.  Germany failed to demonstrate why these particular measures were necessary to protect the interests of workers, to maintain the interests of the minority shareholders or to preserve jobs generated by Volkswagen’s activity.  

 

Competition:  Commission Ensures Microsoft Compliance with Decision

Benoît Keane

The European Commission has come to an agreement with Microsoft on the manner in which it is to comply with the Commission’s 2004 decision.  In the decision, the Commission found that Microsoft abused its dominant position by withholding information on the interoperability with its Windows operating system of work server programmes.  Under the new compliance agreement, Microsoft will offer interoperability information in two separate packages: (i) an agreement covering all non-patented open source material for a one-off fee of EUR 10,000; and (ii) a licence agreement for all relevant Microsoft patents against payment of a royalty of 0.4 per cent on the licensee’s product revenues.  Private parties will be able to enforce this decision before the High Court in London.   

 

State Aid:  Commission Investigates State Guarantee for La Poste

Juan Gutiérrez

The European Commission has opened a formal investigation procedure against France regarding the unlimited State guarantee provided to the French company La Poste.  La Poste benefits from this guarantee because of its status as a legal entity governed by public law.  The guarantee enables La Poste to obtain finance on more favourable terms than its competitors.  The Commission had recommended the withdrawal of the guarantee for La Poste by the end of 2008.  However, subsequent negotiations with France did not convince the Commission that the French proposals amounted to a termination of La Poste's guarantee.  The opening of this in-depth investigation allows interested parties to submit their comments.

 

Social and Labour Law:  EU Blue Card to Attract Highly Qualified Immigrants

Chen Dingsheng

The European Commission has made two legislative proposals in the area of economic migration.  The first proposal would establish a framework directive on the admission of highly qualified migrants, and would establish more attractive entry and residence conditions for them to work in the European Union.  The EU Blue Card, which has been created for this purpose, is entirely demand-driven and fully respectful of the principle of Community preference and Member States' jurisdiction to decide on the numbers of persons admitted.  The second proposal would establish a single application procedure for a single residence and work permit and a common set of rights for third-country workers legally residing in a Member State.  However, it would not harmonise admission conditions for immigrants, which will remain in the hands of the Member States.

 

Mergers:  Commission Approves Imperial Tobacco / Altadis Merger, Subject to Conditions

Alana Tart

The European Commission has approved the acquisition of the Franco-Spanish company, Altadis, by the UK company, Imperial Tobacco.  Both are active in the manufacture and sale of tobacco products worldwide.  Altadis also provides logistical services in certain countries and jointly controls Aldeasa S.A. which operates retail outlets primarily in airports.  The Commission concluded that divestments of one or more brands were required in the roll-your-own tobacco markets in France, Italy, Portugal and Spain, for pipe tobacco in Finland and France and for cigars in Greece.  No concerns were found with regards to cigarettes, the logistical services or retail outlets.

 

State Aid:  Prohibition of Planned Funding for Digital Terrestrial Television in Germany

Mélanie Bruneau

The European Commission has found that German plans to finance part of the fees paid by commercial broadcasters for the transmission of their programmes on the digital terrestrial television network in the German Land of North Rhine-Westphalia are incompatible with EC State aid rules.  The Commission considered that the planned funding of EUR 6.8 million over five years was not an appropriate means of addressing specific problems relating to digitalisation and was not necessary to realise the switchover.  The Commission also found that the German authorities had not demonstrated that the financing could trigger a change in the behaviour of commercial broadcasters, and concluded that, by solely supporting transmission over the digital terrestrial platform, the planned State support would distort competition between terrestrial, cable and satellite transmission.

 

NEXT WEEK’S EVENTS

Monday 29 October – Friday 2 November 2007

 

COUNCIL MEETINGS

Environment Council (30 October 2007)

 

COURT OF JUSTICE

There will be no sitting of the Court of Justice during the week from 29 October to 4 November 2007 inclusive.

 

COURT OF FIRST INSTANCE

There will be no sitting of the Court of First Instance during the week from 29 October to 4 November 2007 inclusive.

 

McDermott Will & Emery

McDermott Will and Emery